The greatest hurdle still remaining in the adoption of RFID technology is its functionality and cost, especially the cost and the performance of transponders. The applications are very fragmented and require application-specific transponders, but this increases significantly the costs for the manufacture of transponders of the inlay type, as the tags cannot be tailored for each end use.
The RFID market development is currently in a phase of planning to start high volume manufacturing. When mass production is adopted, customers expect to have ultra low cost UHF transponders available. In order to achieve that, both fixed sizes for transponders and new ways to manufacture have to be considered. The method of manufacturing has to be designed in view of the exact end products and processes that each package or label manufacturer has, since these features are very different amongst manufacturers.
The basic cost of manufacturing comes from following sections: Raw material cost, antenna manufacturing cost, integrated circuit (IC) assembly cost, converting cost, overall process yields and process efficiency, labour needs per produced transponders and complexity of the management of the process, and equipment costs.
In order to meet the aims for growing business, the manufacturing process has to be not only cost efficient and reliable but also capable of producing tags and labels with a sufficient number of units per hour. The products have to be mass tailored. In roll-to-roll manufacturing, this means that machine setup times have to be short and achievable yields high, irrespective of the product to be produced.
The RFID tag supplier needs to be flexible to make customer-specific tags either because of size requirements or because of materials needed or the RF-performance. As RFID tagging will be shifted from the pallet level to the case and item levels, new challenges for tags are faced: package design restrictions, proximity to wider variety of intermediate materials, and the recycling of packages. Tags will be produced more to fit the purpose.
The retail supply chain is facing pressure to continuously develop consumer driven operations. Retailers expect from their producers replenishment in store shelves based on consumption. Delivery times are measured in hours, not days. This pressure is presently shifting from producers to package and label suppliers, to avoid capital expenses of buffer stocks. This development will not accept conventional made-to-order operations. Converters will have to integrate with their customers and have lean operations. Customer orientation is a prerequisite.
Until now, attempts have been made to minimize costs related to transponder manufacturing mainly by developing various types of low-cost structural module manufacturing concepts and minimizing antenna sizes without really considering the overall value chain, the process flows of final products, the cost of materials, the achievable yields, and the overall equipment capital expenditure.
The assembly of the integrated circuits on the chips is generally considered to be the bottleneck and the highest cost factor in transponder manufacturing. Unfortunately, the overall bottleneck and cost problem of transponder manufacturing is not solved by increasing the units per hour of IC assembly. Also, by partial optimization and disregarding the overall chain of manufacturing, the most severe problems are normally just postponed to the next step in the production chain. This is the case with the structural module products of prior art. The structural modules are of a low quality and of a low yield (all ICs, including those of poor quality, are assembled from wafers, and the ICs are not sorted while picked from the wafer), expensive to assemble into final inlays, the structural module assembly processes are unreliable, and these inlays still require further converting into labels or dispensing if one wants to integrate them in packages. Further, no process has advanced to the industrial level.
All of the IC suppliers planning to offer packaged IC's in a structural module format focus on minimizing the size of the structural module to make the structural module as inexpensive as possible (less structural module substrate consumption and cost, higher packaging density in IC assembly). The cost saving is marginal, and in this way the costs are transferred to later processes. Size minimisation means, in practice, that the structural modules do not include any conjugate matching element to keep the structural module size smaller which, in turn, means that the structural modules have to be connected to the antenna by an ohmic contact. When the antenna structure includes the matching element, a simple strip will no longer function as an antenna, but more advanced and application-specific antenna structures have to be used.
There are a few advanced transponders on the market. Examples of transponders with a capacitively coupled small tag antenna and a larger booster antenna include the Tagsys Kernel tag and the KSW Taurus dual antenna tags. The Tagsys Kernel tag is intended to solve the problem of tagging on the item level. A small booster tag is applied to a primary package which couples to a larger antenna printed on a secondary package. The Taurus provides the tags with better short-range read-write performance.
Another way to do IC assembly is to assemble the IC directly on the transponder antenna, either in a wide web or narrow web format. A problem here is that the packaging density of ICs on the web is relatively low, which slows down both the pick and place and final bond operations. Also, to form the final label, the inlay manufacturer must first make the inlay in several processing steps, and then the label converter must convert it to a label. This requires several unwindings and rewindings, reduces the yields, requires expensive equipment, and reduces the number of units per hour of printing lines, because an electrical outgoing inspection cannot be carried out for webs running at very high speeds.
Publication U.S. Pat. No. 5,305,008 discloses a transponder system. The system comprises a signal responding label including a first antenna for receiving an interrogation signal and for scattering a reply signal, an impedance connected to the first antenna, means for generating the reply signal and means for varying the impedance connected to the first antenna in accordance with the reply signal; and an interrogator comprising a second antenna for transmitting an interrogation signal and for receiving the reply signal, a transmitter connected to the second antenna and including a generator of pulsed radio frequency energy, means for separating the reply signal from the transmitted signal, a receiver connected to the second antenna and means within the receiver for detecting and decoding the reply signal.
Publication U.S. Pat. No. 6,181,287 discloses an RFID circuit for incorporation in an identification device which includes a polymeric substrate, the circuit being formed or integrally connected with said substrate, whereby said substrate becomes a component of the RFID circuit. An embodiment of the circuit includes circuit components printed or attached to the opposite sides of said substrate utilizing the resistance of said substrate in a reactive or inductive circuit.